The federal government's promised review of Canadian rail
freight service has taken a step forward with the final terms of referencereleased and a
request for proposals issued for some of the work ahead.

"The fact that we are moving forward with this review is good
news for shippers of a broad range of commodity groups and will benefit grain
farmers as well," said Transport Minister Lawrence Cannon in a release Tuesday.

"I am particularly interested in the development of
indicators that would help monitor system performance and expedite improvements
when problems arise."

The review, which is expected to take up to 18 months to
complete, is to look at the services offered by Canadian National (CN) and
Canadian Pacific Railway (CPR) to shippers and customers within Canada,
including to and from ports and border crossings.

The scope of the review is to include Canada's rail-based
logistics chain, from shippers and terminal operators to ports and vessels. The
review was first announced as part of a package of amendments to the Canada
Transportation Act in May 2007, passed in February this year.

The review's objectives will also include:

identifying problems and issues with respect to
railway service including those stemming from other elements of the
logistics chain;

for shippers located on shortlines, looking at any
problems with logistics and, if so, finding the sources of the problem
including service, operating, or marketing practices of the main line
carriers;

determining best practices and how these can be
expanded to address service issues; and

making recommendations on how to address these
problems and issues, "including both commercial and, if necessary,
regulatory solutions."

Project proposals

The request for proposals has been issued for two of the
key projects under the review's first stage, which includes the "quantitative
and analytical work," as the terms of reference described it.

The first project is to focus on describing key elements of
the logistics chain and conducting a quantitative analysis of the railways'
ability to fulfill shipping orders and to provide consistent transit times in
moving traffic from origin to destination.

The second project is to examine operating practices within
the rail-based logistics system and identify those practices that adversely
affect service to shippers.

The government also plans to hire a consultant for a third
project: a survey on railway best practices and issues. Transport Canada will
handle a fourth project: an assessment of how service issues are addressed in
other transportation sectors and in regulated industries in Canada and the U.S.,
such as phone, TV, gas, hydroelectricity and U.S. rail.

Between those four projects, the first stage is expected to
take a "minimum of six months, depending on the availability of required data
and the extent of co-operation from railways, shippers and terminal operators in
providing such data."

Review panel

The second stage of the review will then be led by a panel
of three "eminent persons" who would consult on and develop recommendations to
address the problems identified. The second stage is expected to take about six
months.

The government, in the review's terms of reference, said
the panel's members would "preferably" consist of one with a railway background,
one with a shipping background and one member who's considered "neutral."

That panel would be set up near the completion of the first
stage and would issue its final report to the federal transport minister.

The panel would come up with draft recommendations based on
the results of the analytical projects. "Interested parties" would then be
invited to submit comments on railway service and other logistics chain issues,
which the panel would also take into consideration.

The draft recommendations and reports from the analytical
stage would be circulated to interested parties. The panel would then consult
with stakeholders after these documents are circulated.